Allowed

Ms Goenka Jewellers v. Uco Bank

DRT12 Jan 2023SA/308/2022

Case brief

AI extract

What is this about?

The Tribunal allowed the application challenging the Bank's measures under the SARFAESI Act. It quashed the defective Section 13(2) notice for lack of signatory details and non-compliance with Sections 13(3) and 13(3-A). The Tribunal set aside the Section 14 order obtained on false material facts and ordered the restoration of possession to the applicants, noting that actions taken were invalid du

What did the court decide?

Quashed the Section 13(2) notice and related measures under Section 13(4); set aside the Section 14 order; directed restoration of possession of mortgaged properties within eight weeks.

Ms Goenka Jewellers versus Uco Bank — Banking and Recovery | DRT (2023)

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IN THE DEBTS RECOVERY TRIBUNAL No.2, MUMBAI

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SECURITISATION APPLICATION NO.473 OF 2018

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Presented on Registered on	: 21.08.2018 : 27.08.2018
Decided on	: 12.01.2023
Duration	: Y M D 04 04 21
1. M/s. Goenka Jewellers, A
Partnership firm, formed and
registered under Indian Partnership
Act having office at 1305,
Pancharatna, Opera House, Mumbai
400 004. Represented through Mr. Nandlal Goenka partner
2. Mr Nandlal Goenka
3. Mr Navneet Goenka
1305, Pancharatna, Opera House, Mumbai 400 004.	… Applicants
Versus
UCO Bank, through authorised
officer, 1^stFloor, Mafatlal Centre,
Nariman Point, Mumbai-21.	…Defendant

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And

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SECURITISATION APPLICATION NO.308 OF 2022 (S.A. No.36 of 2019 – DRT-1, Mumbai)

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Presented at DRT-1
Mumbai on :	27.02.2019
Registered at DRT-1,
Mumbai on :	02.03.2019
Transferred to DRT-2
Mumbai on :	06.10.2022
Decided on :	12.01.2023
Duration :	Y M D
	03 10 15
	Page1of69

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1 M/s. Goenka Jewellers, A Partnership firm, formed and registered under Indian Partnership Act having office at 1305, Pancharatna, Opera House, Mumbai 400 004. Represented through Mr. Nandlal Goenka partner 2. Mr Nandlal Goenka 3. Mr Navneet Goenka 1305, Pancharatna, Opera House, Mumbai 400 004. … Applicants Versus UCO Bank, through authorised officer, 359, UCO Bank Building, Dr. D.N. Road, 4^th floor, Fort, Mumbai 400 001. …Defendant

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APPEARANCES For the Applicants	: Mr Puneet Gogad Kushal Sawant- Advo	and Mr cates
For Defendant	: Mr O.A. Das, Ms Ru and Ms Pallavi Advocates	chi Bagwe Chari –

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Shri Deepak M Thakkar Presiding Officer

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JUDGMENT RESERVED ON : 13^th December 2022 JUDGMENT PRONOUNCED ON : 12^th January 2023

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JUDGMENT

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(1) The applicants feel prejudiced by the unreasonable, unfair and unwarranted action and

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measures initiated by the secured creditor under the SARFAESI Act read with the Rules. They have knocked on the Tribunal’s door to do justice by applying the rule of Law and declared the secured creditor’s action and measures as unlawful and bad in law.

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(2) The 1^st applicant is the partnership firm, the 2^nd and 3^rd applicants are the partners of 1^st applicant and the defendant is the secured creditor.

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(3) The applicants carries on the business of trading in diamonds. The 1^st applicant’s principal place of business is at Jaipur, Rajasthan. One Nitin Goenka was also the partner of the 1^st applicant.

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(4) On 29^th November 2012, defendant sanctioned cash credit facility of Rs.17 crores to the 1^st applicant. On 16^th August 2013, the 1^st applicant, through its partners, executed loan agreement. The 2^nd applicant, 3^rd applicant and one Nitin Goenka executed the guarantee agreement to secure the credit facilities. To further secure the credit facilities of Rs.17 crores, the applicants created mortgage by deposit of title deeds of (i) Flat No.2, 1^st Floor, Nagindas Mansion, 57/61, Jagannnath Shankar Sheth Road, Opera House, Mumbai – 400 004; (ii) Flat No.3, 1^st Floor, together with Garage No.3, Parekh Mansion, Parekh Sadan Premises CHSL, S.V.P. Road,

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Mumbai-400 004; and (iii) Flat No.4, 1^st Floor, together with Garage No.3, Parekh Mansion, Parekh Sadan Premises CHSL, S.V.P. Road, Mumbai – 400 004. Out of the five mortgaged flats, three flats are situated in Mumbai and two flats are situated at Jaipur.

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(5) The applicants and Nitin Goenka failed to maintain financial discipline. They failed to repay the debt which resulted in the lender classified their account as NPA on 31^st March 2015.

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(6) On 10^th August 2015, the secured creditor issued a 13(2) notice for Rs.17.51 crores. On 18^th September 2015, the applicants objected to the 13(2) notice on various grounds. On 24^th September 2015, defendant responded to the applicants’ objection-cum-representation by rejecting it. On 28^th March 2016, the defendant took the symbolic possession of the three Mumbai flats, that is, Flat No.2 at Nagindas Mansion and Flat Nos.3 and 4 at Parekh Mansion. On 19^th December 2016, the defendant filed Section 14 application and nine-pointer affidavit. On 10^th January 2018, the learned Chief Metropolitan Magistrate passed an order under Section 14. On 10^th August 2018, the Advocate Commissioner issued notice to take physical possession. On 21^st August 2018, the applicant applied under Section 17(1) by filing Securitization Application before

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this Tribunal. The applicant moved Interlocutory Application No.1085 of 2018 and pressed for urgent ad-interim reliefs. On 27^th August 2018, Interlocutory Application No.1085 of 2018 was rejected. On 29^th November 2018, Review Application No.5 of 2018 was filed by the applicant which was also dismissed. On 11^th December 2018, the Advocate Commissioner issued notice to take physical possession of the secured assets. On 8^th January 2019, Hon’ble Bombay High Court passed an order in Writ Petition No.27 of 2019. On 10^th January 2019, Panchnama was made and on 16^th January 2019, the secured creditor published the possession notice.

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(7) On 16^th January 2019, the defendant issued sale notice and scheduled the e-auction on 26^th February 2019. On 28^th February 2019, the secured creditor issued the 2^nd sale notice announcing the e-auction of Flat nos.13 and 16, Ganpati Enclave, Madrampura, Ajmer Road, Jaipur on 29^th March 2019. On 15^th March 2019, the defendant issued sale notice announcing e- auction of Flat No.2, Nagindas Mansion, Mumbai. The auction was scheduled on 30^th March 2019. After that on 18^th March 2021, the applicants made an OTS proposal of Rs.6.5 crores which was rejected by defendant bank on 10^th August 2021.

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(8) On 1^st March 2019, the applicants moved Interlocutory Application No.107 of 2019 in Transferred Securitization Application No.308 of 2022 (Securitization Application No.36 of 2019). On 23^rd March 2019, the applicants moved Interlocutory Application No.164 of 2019 and Interlocutory Application No.165 of 2019 in Transferred Securitization Application No.308 of 2022. On 19^th June 2019, MCGB issued notice to the owners to pull down the dilapidated building Parekh Mansion. On 3^rd December 2019, the applicant moved the Interlocutory Application No.896 of 2019, challenging sale notice dated 16^th November 2019 and 29^th November 2019 concerning Flat Nos.3 and 4 situated at Parekh Mansion. On 5^th December 2019, interim relief was granted to maintain the status-quo concerning Flat Nos.3 and 4 of Parekh Mansion and Flat No.2 of Nagindas Mansion. Being moved by the order dated 5^th December 2019, the defendant bank preferred Miscellaneous Appeal No.83 of 2019 before the Hon’ble DRAT. On 15^th July 2022, the Hon’ble DRAT disposed of the Appeal and expedited the hearing the Securitization Application. On 13^th September 2022, defendant issued sale notice concerning Flat No.2, Nagindas Mansion and announced e- auction on 20^th October 2022. On 7^th October

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2022, borrower objected to the sale notice and e- auction which failed for want of bid. The e-auction failed for want of bids.

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(9) The parties completed the pleadings and based on the facts above, the applicants’ and respondent’s counsel argued orally and also filed the written submissions.

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Applicants’ Written Submission:

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(10) The above Securitization Application No. 473 of 2018 ( 1^st SA ) is filed impugning a measures initiated under S. 14 of the Act by the Respondent Bank and also assailed the Demand Notice dated 10/08/2015 issued by Respondent inter alia on the grounds that;

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(a) There is violation of the S. 13(3) of the SARFAESI Act as no “details” as required by statute are provided.

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(b) Demand Notice does not disclose the name and designation of the signatory.

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(d) S. 14 order obtained by making false statement on oath.

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(e) Authority of the deponent of S. 14 application and affidavit is defective.

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(f) Respondent Bank has not disclosed all the 9 points as envisaged under first proviso to S.

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14(1) of the Act.

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(g) There is sheer non compliance of the S. 23 read with S. 26D of the SARFAESI Act.

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(11) Thereafter, vide Interim Order dated 27/08/2018 the Interim Application No. 1085/2018 was rejected. Being aggrieved, Applicants have filed Review Application No. 05 of 2018 which was also rejected vide order dated 29/11/2018. Being aggrieved, Writ Petition No.(Stamp) 27 of 2019 was filed. Vide order dated 08/01/2019 Writ Petition was rejected on maintainability and not on merits. (see page no. 8-28 Bank’s reply to SA 308/22)

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(12) Thereafter, in a pending SA once again the Interim Application No. 25 of 2019 was rejected vide order dated 10/01/2019 and accordingly the Advocate Commissioner took physical possession of the subject properties on 10/01/2019. (see page no. 29 Bank’s reply to SA 308/22)

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(13) Respondent issued Sale Notice dated 31/01/2019 scheduling auction of both the properties on 05/03/2019. Applicants have filed fresh SA No. 36 of 2019 before DRT-1, Mumbai on 27/02/2019 (now numbered as S. A. No. 308 of 2022 before DRT-2, Mumbai 2^nd SA ) inter alia seeking relief;

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i) To declare act of taking over physical possession on 10/01/2019 is bad in law.

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ii) Quash and set aside E-auction notice dated 31/10/2019

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iii) Quash and set aside Demand Notice dated 10/08/2015.

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(14) No auction conducted under 1^st sale notice dated 31/01/2019.

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(15) Respondent issued another sale notice dated 08/11/2019 & 29/11/2019 for both the properties. Applicants have filed amendment application (IA 895/19) and stay application (IA 896/19) . Hon’ble In charge Tribunal i.e. DRT-Pune vide its order dated 05/12/2019 was pleased to restrain the Respondent from proceeding further under SARFAESI Act. (see page no. 31 Bank’s reply to SA 308/22) .

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(16) Interim order dated 05/12/2019 challenged by Respondent in Misc. Appeal No. 83 of 2019. Vide order dated 15/07/2022 the Hon’ble DRAT, Mumbai was pleased to modify the impugned order permitting the Respondent to issue fresh sale notice qua Flat No. 2 but didn’t disturb the stay granted on Flat No. 3 & 4 which are not in existence anymore as demolished by BMC. The Hon’ble DRAT was pleased transfer the SA No. 36 of 2019 which was pending before DRT-1 to DRT-2 and directed this Hon’ble DRT-2, Mumbai to hear and dispose of both the SA’s as same demand notice is under question in both the SA’s. (see page 34 Bank’s reply to SA 308/22) .

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(17) Accordingly, the Stay granted qua Flat No. 3 & 4

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vide order dated 05/12/2019 in SA No. 36 of 2019 continues as not disturbed by Hon’ble DRAT, Mumbai.

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(18) Ground (a)- There is violation of the S. 13(3) of the SARFAESI Act as no “details” as required by statute are provided.

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(19) That, the Demand Notice dated 10/08/2015 (page 50-35 of SA) clearly reveals that Respondent failed to give complete “details” of the claim. There is no bifurcation of the principal and interest of the total outstanding, rate of interest and period for which interest is charged is absent, not provided the exact figure of interest and penal interest, cost, charges and incidental expenses as claimed in the lower portion of the demand notice. Thus, gross violation of s. 13(3) of the Act.

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(20) Different demand notices have been issued to the different entities and every demand notice provides different set of properties and credit facilities. Thus, there is series variance in the contents. Thus, having all “d etails ” in a punctual manner is very much essential.

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(21) Applicants have filed objections dated 18/09/2015 (page 55-58) has categorically challenge the notice on several grounds such as quantum, charging of excessive interest, heavy processing charges, not credit of the foreign exchange gain etc. Raised the violation of S. 13(3)

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and call upon the Respondent for details. No details provided. Thus, violation of S. 13(3) of the Act.

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(22) Relevant Judgments-(not reproduced)

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i. PNB V. Mithilanchal IndustriesMANU/ MANU/GJ/1069/2020 (para 28 to 30 & 40 - 42)

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ii. Madhu Sudhan Ghosh V. Bank of Baroda 2010 SCC Online Cal 2607 (para. 8 and 9)

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iii. Bhavdipbhai Arunbhai Dave vs. Kotak Mahindra Bank Limited (20.01.2022 - GUJHC) : MANU/GJ/0273/2022 (para. 11-13)

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iv. Kenwood Marketing INC V. HDFC (DRAT, Mumbai order dated 20/06/2022 in Appeal No. 106 of 2016) (para. 12 to 15)

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(23) Ground (b)- Demand Notice does not disclose the name and designation of the signatory.

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a. Demand Notice dated 10/08/2015 (page 54) as well as Response under S. 13(3-A) dated 24/09/2015 (page 59) clearly goes to show that signatory has neither mentioned his name nor the designation. Hence, bad in law in view of the law laid down by Hon’ble DRAT, Mumbai.

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b. Relevant Judgment-(not reproduced) IDFC First Bank Ltd. V. Tristar Cars Pvt. Ltd. MANU/DM/0018 /2019 (para. 15)

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(24) Ground (C)- Respondent violated S. 13(3-A) of the Act by not giving reasoned reply as mandated

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under Act.

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a. Applicants vide objections and representations dated 19/09/2015 (55-58) raised several important issues directly touching to the root of the matter and called upon the Respondent to answer the same and provide the “details”.

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b. Respondent vide their response dated 24/09/2015 (page 59) failed to deal with any of the objections and representation. As per the settled position of law as laid down in ITC case authorised officer has not given mindful and reasoned reply thus, clear violation of the S. 13(3-A) of the Act.

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c. Relevant Judgment-(not reproduced) ITC Hotel V. Blue Coast (2018)15 SCC 99- para. 24-26.

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(25) Ground (d) - S. 14 order obtained by suppression of material facts and by making false statement on oath.

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a. In a 9 pointer affidavit dated 19/12/2016 at para. 10 (page 86) and Application at para. 10 (page 68) Authorised Officer made a false statement that borrowers have not raised any objections to the demand notice. This statement is factually incorrect as page 54-58 shows objections and page 59 shows their response. Ld. CMM, Mumbai has not verified the truthfulness and passed an order based on false

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statement. Respondent played fraud with the CMM and obtained an order which is nullity. Consequences of the same, S. 14 order vitiates and Respondent be directed to restore physical possession of both the properties.

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b. Ld.CMM, Mumbai vide its order dated 10/01/2018 (page 87-94 of SA) at para. 5 held incorrectly that Respondent Bank has complied with all 9 conditions as required under S. 14. Thus, S. 14 order is passed mechanically. It is ex-facie evident that there is no correct satisfaction recorded by the Ld. CMM. qua compliance of Section 14 of the SARFAESI Act.

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c. Relevant Judgments-(not reproduced)

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i. S. P. Chengalvaraya Naidu V. Jagannath (1994) 1 SCC 1 para. 5 &6.

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ii. Satishkumar S. Shetty V. District Collector 2022 SCC OnLine 2847 (para 16B)

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(26) Ground (e) & (f)- Authority of the deponent of S. 14 application and affidavit is defective.

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Mr. Bheemanna has filed S. 14 application on the basis of unregistered Power Of Attorney dated 12/12/1988(page. 74-81). As per POA deponent is an Assistant and not Chief Manager or above rank. This POA of 1988 cannot be termed as an authorisation for the purposes of SASRFAESI Act as Act has come into force in 2002. Under this POA of 1988 no power or authorisation under

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SARFAESI Act 2002 could have been rendered. Thus, very institution of the S. 14 application is materially defective and non est.

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(27) Ground (h) There is sheer non compliance of the S. 23 read with S. 26D of the SARFAESI Act.

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a. It is matter of fact and record that the Respondent Bank has registered their security interest with the CERSAI Authority only on 15.10.2022 (page 109 of Bank reply to SA 308) which is much after invocation of the provisions S. 13 to 19 of the Act.

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b. In view of the disabling provision of S. 26D, Respondent Bank is disqualified from invoking measures under Chapter III of the SARFAESI Act.

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(28) Demand Notice is defective, there is gross violation of s. 13(3) and 13(3-A) of the Act is very much apparent and S. 14 order obtained by fraud, entire action needs to be set aside and Respondent be directed to restore the possession of the said properties. Cost of the litigation including court fees be provided.

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(29) RESPONDENT FILED THEIR REPLY & WRITTEN SUBMISSIONS AND CHALLENGED THE MAINTAINABILITY OF THE SA ON THE GROUND OF ISSUE OF LIMITATION & WAIVER inter alia stating, since symbolic possession is not challenged, borrower is debarred from challenging

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S. demand notice and symbolic possession notice.

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(30) REPLY OF APPLICANTS ON THE GROUND OF LIMITATION& WAIVER-

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(31) Applicants have filed 1^st SA at the stage of S. 14 order and challenged the measures under S. 14 of the Act and action under S. 13(2) of the Act. Whereas, 2^nd SA was after taking physical possession and upon issuance of sale notice.

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(32) Applicants herein are very much vigilant about their rights from day one upon issuance of demand notice and have not waived any rights either expressly or impliedly under the Act. As there is no dichotomy between symbolic and possession, thus, challenge of s. 14 is also challenge to possession.

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(33) In a challenge under S. 17, relief is provided under S. 17(3) of the Act. S. 17(3) provides relief of restoration of possession. Thus, upon challenge of ANY measures, relief of restoration can be sought.

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(34) Issuance of demand notice under S. 13(2) of the SARFAESI Act is “an action” and “not a measure”. Whereas, the period of limitation to challenge the measure is provided under the Act and there is no prescribed period of limitation is provided to challenge the action ie. Demand Notice. In fact the legislative scheme of the SARFAESI Act does not allow the aggrieved party to challenge the demand

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notice alone and the same comes up only upon any of the measures under S. 13(4) are invoked which includes measures under S. 14 as well. Measure under S. 14 is nothing but an extension of the measures under S. 13(4) of the Act. Thus, entire boggy of challenge on the ground of limitation or waiver fails as misconceived.

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(35) As per the law settled by Hon’ble Supreme Court and other High Courts, while doing a scrutiny under S. 17 application, DRT has been empowered b S. 17(1), (2) and (3) to examine all the steps taken by secured creditor with a view to find out as to whether the sale of the secured assets was made in conformity with the requirements contained in S. 13(4) read with Rules or not? (para. 27 of Agarwal Tracom V. PNB- 2018(1) SCC 626)

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(36) There are enormous defects and illegalities in the entire action i.e. in the demand notice and further measures of S. 13(4) and 14. Moreover, the fraud played with the Ld. CMM is serious in nature and law does not prescribe any strict period of limitation to unearth the fraud. This Hon’ble Tribunal cannot seat as a mute spectator and allow the illegalities to continue only on technicality. Thus, challenge to demand notice is sustainable in its all effect.

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(37) There are certain judicial pronouncements of the

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Higher Courts which squarely covers the issue under hand. In order to demonstrate the settled position of law, the Applicants relying upon following authorities which are as under;

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(38) Relevant Judgments

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(39) A. O. INDIAN OVERSEAS BANK V. ASHOK SAW MILLS (para. 29, 35)

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(40) AGARWAL TRACOM PVT. LTD. V. PNB(2018) 1 SCC 626- (para.27& 29)

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27. The reason is that Section 17(2) empowers the Tribunal to examine all the issues arising out of the measures taken under Section 13(4) including the measures taken by the secured creditor under Rules 8 and 9 for disposal of the secured assets of the borrower. The expression "provisions of this Act and the Rules made thereunder" occurring in sub-sections (2), (3), (4) and (7) of Section 17 clearly suggests that it includes the action taken under Section 13(4) as also includes therein the action taken under Rules 8 and 9 which deal with the completion of sale of the secured assets. In other words, the measures taken under Section 13 (4) would not be completed unless the entire procedure laid down in Rules 8 and 9 for sale of secured assets is fully complied with by the secured creditor. It is for this reason, the Tribunal has been empowered by Section 17(2),(3) and (4) to examine all the steps taken by the

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secured creditor with a view to find out as to whether the sale of secured assets was made in conformity with the requirements contained in Section 13(4) read with the Rules or not?

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(41) VASU SHETTY V. HOTEL VANDANA PALACE(2014) 5 SCC 660- (para. 23 /24)

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(42) PHOENIX ARC V. SUNIL SOLVENT –DB BOM HC- 2019 SCC OnLine Bom 14 (3,7,26)

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SA was filed before DRT challenging sale notice on the ground symbolic possession notice was not published. Hon’ble DRT allowed the SA on violation of Rule 8(2). Hon’ble DRAT confirmed the order of DRT. Hon’ble High Court BOMBAY confirmed the orders of DRT and DRAT.

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(43) MANGLESH CHAMPAKLAL GANDHI VS. ADITYA BIRLA FINANCE LTD. (07.10.2019 - GUJHC): MANU/GJ/2154/2019 GJ HC Single bench(LPA/224/2020) is pending, NO STAY to ORDER) (20.1, 21 & 23)

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The question involved herein is the exact question decided by Hon’ble single Judge inter alia holding that 23. “In light of the decisions of the Supreme Court in the case of Mardia Chemicals (supra) and Hindon Forge (supra) which have held that the cause of action to the borrower accrues from the time the notice under Rule 8(1) and 8(2) is issued and the borrower can approach the Tribunal before the date of auction sale, I agree with the submission of Mr. Pandya that the right

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accrues till such date and negate the submission of Mr. Mihir Thakore, learned Senior Advocate that each measure is a separate cause of action and once the first measure is not challenged the petitioner cannot subsequently do so. Such submission of Mr. Thakore is not in consonance with the law as discussed hereinabove.

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(44) BHAVDIPBHAI ARUNBHAI DAVE V. KOTAK MAHINDRA BANK –MANU/GJ/0273/2022- (para 8- 13)

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Bank has taken symbolic possession but not challenged by borrower. SA was filed after S. 14 order passed and notice for possession was issued. Interim Relief was rejected by DRT. Order of DRT was directly challenged before Hon’ble Gujarat HC in writ jurisdiction. Hon’ble High Court after noting the merits granted interim protection till disposal of SA on the ground of defect of S. 13(3) in a demand notice relying upon citation of Mithilanchal Industries.

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(45) KANIKA SWAMI V. STATE OF UP- 2017 SCC OnLine All 2299- Para. 29 & 30. 29. A perusal of the above provisions of the SARFAESI Act, 2002 and the Security Interest (Enforcement) Rules, 2002 clearly prove that the sufficient checks have been imposed upon the secured creditor while proceeding with the possession and sale of the secured assets of the borrower. When the action of the secured

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creditor is challenged by the borrower under Section 17 (1) of the SARFAESI Act, 2002, the secured creditor is required to prove the compliance of all the mandatory provisions of the Act and the Rule before the Debt Recovery Tribunal. If any of the requirements of Act and the Rule is not found to be complied by the Debt Recovery Tribunal, the action of the secured creditor fails against the borrower.

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(46) PNB V. MITHILANCHAL INDUSTRIES- DB GJ HC- para. 30-33 and 41. (Here SA was filed at SYMBOLIC)

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(47) SWASTIK AGENCIES V. SBI (Orissa HC DB) confirmed by SC. (2009) SCC OnLine Ori 3 (29,68,71)

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SA was filed at the stage of Sale without challenge to symbolic possession. Orissa HC held that if foundation is defective and entire super structure falls down. On the ground of defect in measure of possession under Rule 8, the 13(4) was quashed.

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(48) MADHUSUDHAN GHOSH V. BOB – 2010 SCC OnLine 2607- Calcutta HC-(para. 8-11)

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SA was filed at the stage of sale. Since there was violation of S. 13(3) and 13(3-A) of the Act, the demand notice was quashed.

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(49) DRT-2, Mumbai in TSA No. 21 of 2022 NYKA STEEL V. UCO BANK – SA was filed at the stage of

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Physical possession challenging S. 14 order. SA pertains to symbolic pending before Pune was withdrawn. Vide final order dated 24.11.2022 DRT-2, Mumbai allowed the SA in an identical situation and quashed and set aside Demand Notice and directed Bank to restore possession to the borrower.

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(50) DRT-1, MUMBAI (IN CHARGE DRT-PUNE) SA NO. 38/19- PREMNARAYAN KABRA V. PNB- SA WAS FILED CHALLENGING SALE NOTICE. Sale failed. Still DRT-1 Mumbai after examining the defects in the S. 13(2) action quashed and set aside demand notice and directed the Bank to restore possession vide its final order dated 01.01.2020.

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(51) The said order dated 01.01.2020 was challenged before Bombay High Court. Hon’ble HC didn’t interfere in the order but directed Bank to challenge before DRAT. Bank didn’t challenge the same and restored the possession.

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(52) SAHAJ ANKUR CASE LAW RELIED UPON BY RESPONDENT-

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a. So far as the reliance on the law decided in Sahaj Ankur Case is concerned, Applicants state that the facts and the issues arisen in the Sahaj Ankur Case and present cases in hand are completely dissimilar, thus, the decision of the Sahaj Ankur is not per-se applicable to the set of facts in this SA’s.

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b. Moreover, the authorities relied upon by the present Applicants in these matters were neither relied upon by parties nor considered / discussed by this Hon’ble Tribunal while deciding Sahaj Ankur case. Thus, on the point of law also the dictum of Sahaj Ankur case is not applicable here. Fundamental distinguishing

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facts are as under;

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Sr	Sahaj Ankur Case	Goenka Jewellers Case
1	Borrower has not replied to the demand notice.	Borrower has replied to the demand notice and challenged the NPA as well asquantum from dayone.
2	The Borrower has not raised issue of violation of S. 13(3).	Here issue of violation of S. 13 (3) subsist from day one. Bank didn’t comply withthe same.
3	There is no issue of violation of S. 13(3-A) oftheAct.	There is serious issue of violation of S. 13(3-A) of theAct.
4	Borrower has not challenged the symbolic possession. But, prayed to set aside the sameinSA.	Borrower has not challenged the symbolic possession, nor prayed for the said relief.
5	S. 14 order passed and physical possession taken. NO challenge by borrower.	Upon passing S. 14 order, borrower within limitation filed SA No. 473 of 2018 and challenged the same.
6	Borrower lost physical possession no challenge.	During pendency of SA No. 473 of 2018 and upon facing adverse orders, borrower lost physical possession. Physical possession is now subject to out come ofthe
7	Borrower didn’t challenge 1^stauction	Borrower challenged 1^st auction notice and act of

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	notice.	taking over physical
		possession by way filing 2^ndSA No. 36 of 2019 before DRT-1, (now SA No. 308/22 before DRT-2). DRT-1 passed interim order of stay in favor of borrower.
8	Bank issued 2^nd auction notice. Neither objections, nor challenge under S. 17. Bank conducted an auction still no challenge. Bank issued sale certificate and handed over physical possession- No challenge.	Whenever Bank has issued notice either for physical possession or sale, Applicants have promptly challenged the same before this Hon’ble Tribunal.
9	SA No. 78 of 2022 was filed on 24/07/2020 after issuance of sale certificate and handing over physical possession to purchaser.
10	Here, Hon’ble Tribunal has also referred judgment of_Manglesh_ Gandhi (GJ HC Single Bench). Single Bench order is challenged before Division Bench but not stayed and LPA is pending till date. C/LPA/224/2020	Law laid down by Hon’ble GJ HC in_Manglesh Gandhi_ directly covers the issue under consideration. Moreover, in_Bhavdip Bhai_ _Dave’s case_the SA was filed at the stage of S. 14 order. IR rejected by DRT and GJ HC in writ jurisdiction granted the interim protection on the ground of defect of S. 13(3) in a demand notice relying upon Mithilanchal. Other judgments as

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referred and cited	herein
above are squarely	covers
the issue	under
consideration.

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(53)

¶144

ACRE POLYMER CASE LAW RELIED UPON BY

¶145

RESPONDENT-

¶146

c. So far as the reliance on the law decided in ACRE POLYMER CASE is concerned, Applicants state that the facts and the issues arisen in the ACRE POLYMER CASE and present cases in hand are completely dissimilar, thus, the decision of the ACRE POLYMER CASE is not per se applicable to the set of facts in this SA’s.

¶147

d. Moreover, the authorities relied upon by the present Applicants in these matters were neither relied upon by parties nor considered / discussed by this Hon’ble Tribunal while deciding Sahaj Ankur case. Thus, on the point of law also the dictum of Sahaj Ankur case is not applicable here. Fundamental distinguishing

¶148

facts are as under;

¶149

Sr	ACRE POLYMER CASE	Goenka Jewellers Case
1	Default is admitted. Borrower has not replied to the demand notice. Nor challenged the symbolic possession, physical possession and first 4 auction notices.	Borrower has replied to the demand notice and challenged the NPA as well as quantum from day one. Here issue of violation of S. 13(3), 13(3-A) is alreadyraised.
2	The Borrower has not raised issue of violation of S. 13(3).	Here issue of violation of S. 13 (3) subsist from day one. Bank didn’t

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		complywiththe same.
3	There is no issue of violation of S. 13(3-A) of theAct.	There is serious issue of violation of S. 13(3-A) of theAct.
4	Borrower has not challenged the symbolic possession.	Borrower has not challenged the symbolic possession, nor prayed forthe saidrelief.
5	S. 14 order passed and physical possession taken. NO challenge by borrower.	Upon passing S. 14 order, borrower within limitation filed SA No. 473 of 2018 and challenged the same.
6	Borrower lost physical possession no challenge.	During pendency of SA No. 473 of 2018 and upon facing adverse orders, borrower lost physical possession. Physical possession is now subject to out come ofthe
7	Borrower didn’t challenge 4 auction notices. But, requested for the restructuring of the loan accounts which was granted and Sale was differed for 1 year time. (para. 6.8 & 6.15, 24).	Borrower challenged 1^st auction notice and act of taking over physical possession by way filing 2^ndSA No. 36 of 2019 before DRT-1, (now SA No. 308/22 bfr DRT-2). DRT-1 passed interim order of stay in favor of borrower.
8		In fact the Hon’ble SC at para. 27 has held that the SC is not required to examine the second point ie. Whether in an application u/s. 17 which can be filed when a borrower is aggrieved by any of the measures u/s. 13(4) within 45 days from the date of

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such measures are
taken, the borrower can
challenge other
measures, steps
procedure which
preceded the ultimate
sale even in if barred by
limitation period of 45 days.
This issue never decided
by the Hon’ble SC, thus,
thelawdecided.

¶154

(54) Judgment of GM, Sri Siddeshwara Bank V. Ikbal relied upon b Bank is also not applicable to the facts of these cases. In Ikbal’s case, the borrower vide letter dated 13.11.2016 tendered his express consent that auction conducted in favour of auction purchaser be accepted and sale certificate be issued to him. Thereafter, challenge the auction sale. (para. 16 at page 395 of Bank’s compilation of judgment).

¶155

(55) Judgment of Jalgaon Janta Sahakari Bank– There is no issue of priority of the claim involved in these SA’s. Thus, on this point at least it is on no avail.

¶156

(56) ON THE POINT OF RES JUDICATA a. Respondent has also stated during oral augments that the issues under considerations are already decided vide interim order, review application or order of Hon’ble High Court.

¶157

b. Applicants state that the order dated

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¶159

27/08/2018 is an interim order and not a final order. Thus, there is no question of Res Judicita

¶160

c. Moreover, the Hon’ble High Court has neither upheld nor disturbs nor modified the interim order dated 27/08/2018 or an order in review dated 29/11/2018. But, simply rejected the writ petition as alternate remedy of appeal is available to the applicant. Thus, issue under this SA can be suitably decided by DRT at this final stage. All orders are interim orders and thus cannot act as a precedent. Thus, final view cannot be taken de hors to interim.

¶161

(57) Relevant Judgments-

¶162

i. State of Assam V. Barak Upatyaka D. U. (2009) 5 SCC 694- para-21

¶163

ii. M/s. SREI Equipment Finance Ltd. V. Nirmal Lifestyle Ltd. (DRAT, Mumbai Misc. Appeal 126/2022) order dated 14/11/2022

¶164

(58) ON COMPILATION OF ADDITIONAL AND FRESH DOCUMENTS BY BANK

¶165

A. Respondent has also produced certain new documents which were never ever produced before this Hon’ble Tribunal either at the time of interim order, review order or before Hon’ble High Court. Applicants object for production of the new evidence at the time of final hearing in a remand back matters that too without leave of this Hon’ble Tribunal.

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B. Hon’ble DRAT, Mumbai vide order dated 15/07/2022 has not granted any liberty to the parties to lead fresh evidence and thus, the said additional documents cannot be looked into.

¶168

(59) Declarations and POA- In the alternative and without prejudice to above submissions, even if the said documents are taken on record then also the said documents does not turn anything in favour of the Bank as the said Declarations and POA and other alleged notarised documents failed to established there authenticity in the eyes of law. Notarised documents do not bear the stamp and number of the Notarial Register to prove its authenticity in view of Notary Act. Thus, in view of the law laid down by Hon’ble Bombay High Court in AIR2004 Bom 55 in the case of J. G. Hedge V. R. D. Shukla the said Declarations and POA cannot be looked into even for collateral purposes.

¶169

(60) OTS Proposals- It is true that the settlement proposals and correspondences are exchanged between the parties for OTS. Till date the OTS is not sanctioned. Respondent has contended first time in this Written Submissions, (though not pleaded in the Affidavit in Reply) that in the OTS letters, borrower has not taken objections.

¶170

(61) Applicants submit that the objections to the demand notice and claim thereunder is to be

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taken at the stage of reply to demand notice which is already taken by the Applicants. There is sheer failure of the Bank to comply with the same. Just to mislead this Hon’ble Tribunal all these fresh documents (without leave) has been produced.

¶173

(62) Besides these issues there is no justifiable and convincing defence available with the Respondent in order to disprove the contentions of the Applicants.

¶174

Respondent Bank’s Written Submission:

¶175

(63) At the outset it is respectfully submit that admittedly upon the request of the Applicants, the Respondent Bank granted several credit facilities sanctioned/granted/renewed by the Respondent in favour of the Applicant. In order to secure the facilities, the Applicant have executed and delivered necessary security documents. The Applicant Nos. 2 and 3 and one Shri. Nitin Goenka, being partner of the firm, stood as Guarantors and interalia, agreed and undertook to repay the said credit facilities with interest, costs, charges etc. in case of default committed by the Applicant by executing Guarantee Agreement.

¶176

(64) In consideration to the said credit facilities sanctioned/granted/renewed by the Respondent in favour of the Applicant, the Applicant M/s. Goenka Jewellers though its Partners the Applicants have created further security interest

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over Secured Assets by way of equitable mortgage of deposit of Title Deeds and also deposited all the Original Title Deeds of the Secured Asset with the Respondent Bank with an intention to secure the said credit facilities granted by the Respondent Bank which was recorded in the Memorandum of Deposit of Title Deeds. i.e.-

¶179

(a) Flat No. 16, Ganapathi Enclave, Block B, 5^th Floor, Madrampura Ajmer Road, Jaipur, Rajasthan

¶180

(b) Flat No. 13, Ganapathi Enclave, Block B, 5^th Floor, Madrampura Ajmer Road, Jaipur, Rajasthan

¶181

(c) Flat No. 2, on 1^st Floor, Nagindas Menssion, Situated at 57/61, Jagannath Shankarseth Road, Opera House, Mumbai - 400 004

¶182

(d) Flat No. 3, 1^st Floor, together with Garage bearing No. 3, Parekh Menssion, 512, Parekh Sadan Premises CHSL, S.V.P. Road, Mumbai - 400 004;

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(e) Flat No. 4, 1^st Floor, together with Garage No. 3, Parekh Mansion, Parekh Sadan Premises CHSL, S.V.P. Road, Mumbai - 400 004;

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(65) It is further state that the Mortgage is in order which is legally executable. The Applicant / Owners of the properties have also executed and delivered declarations and Power of Attorneys. The owners of the properties stated by oath that in

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case of the firm (borrower) failed to repay the dues, they will hand over the Physical Possession of the Properties with the Bank and the Bank can sell and recover their dues.

¶187

Hereto submitting copy of the Declaration and Power of Attorney in Compilation of Documents at Serial No.2.

¶188

(66) The Applicants committed default in repayment, accordingly the Respondent Bank has declared the account as NPA on 31.03.2015; as per banking norms and RBI guidelines. After receipt of Notice u/s.13(2) of the SAFRAESI Act, 2002, the Applicant sent Letter u/s.13(3) to the Applicant. In the above Letter mainly they have discussed about the litigation/dispute of partners and for regularization of Account. They have also requested for the bifurcation of the demand - interest - cost - charges etc. To the above objections the Respondent by its Letter u/s. 13(3A) of the SARFAESI Act, 2002 dealt with the main issue of dispute of the Partners.

¶189

(67) It is respectfully submit that u/s. 13(2) Notice contained all the requirements as contemplated in the Act and Rules. Not suppressed and/or left out any information as required in the Notice. It is further say that the Section 13(2) Notice and Section 13(4) are signed by an Authorized Officers as required by the Act.

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(68) Thereafter the Respondent have taken Symbolic Possession of the properties on 16.05.2016. The Possession Notice were published in newspapers and also pasted and complied other formalities.

¶192

(69) The Notice u/s. 13(2) was issued by one Shri. G. S. Sharma, then Asst. General Manager of Nariman Point Branch, Authorized Officer of the Bank. The officer has been retired on or about 21.12.2016. I further say that after the account was declared as NPA, as per our Banking Policy the Account was transferred to AMB Branch.

¶193

(70) At the time of filing Application u/s. 14 of the SARFAESI, Act, 2002, Shri. Bheemanna was the Chief Manager and Authorized Officer of the Bank. Thereafter, Shri. Bheemanna being the Authorized Officer have filed the Application u/s. 14 of the SARFAESI, Act, 2002. Thereafter Shri. Bheemanna retired and Shri. B. P. Singh was substituted in the place of Shri. Bheemanna. The Hon’ble CMM Court considered the same and have passed an Order u/s. 14 of the SARFAESI, Act, 2002. Hereto submitting copy of the Hon’ble CMM Court Order in Compilation of Judgment at Serial No. 1.

¶194

(71) It is further submitted that Shri. Bheemanna was an Officer, at the time of issue of Power of Attorney by the Respondent’s Head Office, Calcutta; in order to attend court matters pertaining to the Bank. The Power of Attorney’s to

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its officers are used to issue from our head office only. It is further submit that after he became Chief Manager as per the SARFAESI, Act, 2002, he is automatically an Authorized Officer as contemplated in the Act / Rules. Copies of POA were annexed alongwith the Affidavit in Reply. At the time of filing the Application U/s. 14, he has just submitted his old Power of Attorney, showing his authority to appear before the Hon’ble Court. The said Power of Attorney is not required to be Registered, since it was issued only to appear before the Hon’ble Court. With due respect I say that, the Order of Hon’ble CMM cannot be challenged before this Hon’ble Tribunal It is respectfully submit that u/s. 14(3) of the SARFAESI, Act, 2002, the Order of the Hon’ble CMM Court cannot challenge before any Court or Authority. However, only the Hon’ble High Court and Hon’ble Supreme Court under constitutional inherent powers has power to deal with the Hon’ble CMM Court’s Orders. It is therefore submit that the prayer challenging the Hon’ble CMM Courts’ Order is not maintainable and may be rejected with cost. Thereafter an Application under Section 14 of the Act was filed in the Hon’ble Court.

¶197

(72) Thereafter the Applicant have filed an S.A. and have filed I.A. for Interim Relief.

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(73) It is respectfully submit that the Securitization Application is grossly time barred. In the above matter account was declared as NPA on 31.03.2015 Notice u/s. 13(2) of SARFAESI Act 2002, was issued on 10.08.2015. After 60 days of statutory period, the Applicant failed to repay the dues, therefore the Bank took Symbolic Possession of the mortgaged properties u/s. 13(4) of SARFAESI Act 2002, on 28.03.2016. The present S.A. is filed on 21.08.2018. There is no prayer for condonation of delay or any pleadings or filed any separate Application to condone the delay. Therefore, it is respectfully submit that the S.A. is time barred. Even though it was Interim Application but the Hon’ble Court heard the matter as of final hearing that is to say the Hon’ble Court considered all issues in the S.A. especially the issue raised in respect of 13(2) Notice and its contents. The above issues were argued at length by several eminent councils for the Applicant before the Hon’ble Court. The Hon’ble Court considered all the issues and have not granted any reliefs.

¶200

(74) The Hon’ble Court in its Order dated 27.08.2018 considered all issues and have passed the Order. The important observation of the Hon’ble Court is reproduced hereunder:-

¶201

Para 7. The Applicants have not challenged the

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taking of Symbolic Possession of the suit flats as taken on 28.03.2016. The limitation of filing the present SA has to be computed from the date of last cause of action which is dated 10.08.2018. The Applicants have sent letters to the Respondent Bank for regularization of loan account on various dated i.e. 17.07.2015, 03.08.2015, 06.08.2015, 10.08.2015, 28.09.2015, 08.01.2016 and 11.02.2016 but the Respondent Bank did not agree to accept the request of the Applicants in this regard.

¶204

Para 8. The Applicants relied upon certain judgments to substantiate their contention that the demand notice must bear details of the amount as mandatory for want of that demand notice is illegal and invalid as per the judgment dated 30.07.2010 passed by the Hon’ble High Court of Calcutta in the case of Madhu Sudan Ghosh & Anr. - Applicants V/s. Bank of Baroda & Ors - Respondents, judgment dated 19.10.2012 by the Hon’ble High Court, Patna in the case of Tirupati Storage & Allied Pvt. Ltd. - Applicant V/s. The United Commercial Bank, Kolkata and the Judgment dated 08.04.2004 passed by the Hon’ble Supreme Court in the case of Mardia Chemicals Ltd. - Applicant V/s. Union of India & Ors. In all the aforesaid judgments, it has been held that

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communication of details of amount in the demand notice i.e. details of particular amount, interest claimed rate of interest, debit and credit and other charges must be mentioned in the demand notice failing which the demand notice should not be considered as statutory demand notice and in substance this demand notice does not empower the Respondent Bank to take measures under Section 13(4) and Section 14 of the SARFAESI Act.

¶207

Para 9. The Applicants submitted that the Respondent Bank in its Application dated 19.12.2016 under Section 14 of the SARFAESI Act, for obtaining the order of the Ld. CMM, Esplanade, Mumbai have made wrong statement in its para 10 that the Applicants have not raised any objections/replied to the said demand notice under Section 13(3-A) of the SARFAESI Act whereas the admitted case of the Respondent Bank is that Applicants have submitted their Representation/objections to the Demand Notice under Section 13(2) of the SARFAESI Act. It has been submitted that the Applicants have committed fraud upon the Ld. Court of CMM, Esplanade Mumbai and upon such fraud the Respondent Bank has obtained the Order under Section 14 of the SARFAESI Act of the Ld. CMM, Esplanade, Mumbai and on

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that ground the Respondent Bank is not entitled to take the physical possession of the suit flats because the said Order has become a nullity.

¶210

Para 10. In my view, the Respondent Bank should not make any such wrong statement and it shall take care in future. Further, I find that the said wrong statement is a mistake of the Respondent Bank but the same is not a valid ground to take the view that the said Order is a nullity. It is not of such nature that prevents the Ld. CMM, Esplanade, Mumbai to pass the Order under Section 14 of the SARFAESI Act.

¶211

Para 11. Before giving a finding on the question of validity and legality of the Demand Notice, I need to examine as to whether the Applicants by this conduct and actions shall be considered to have waived their rights to agitate the issue of validity of the Demand Notice. The Applicants have filed the present SA on 21.08.2018 challenging the taking of physical possession of the suit flats on the ground that demand notice is not a legal and valid one and the same does not make the Respondent Bank entitled to take the recourse of the provisions under Section 13(4) and Section 14 of the SARFAESI Act for the recovery of its outstanding dues. The demand notice was

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issued on 10.08.2015 and since then months and years have passed. The Applicants went on attempting throughout only to get the loans regularized by their letters dated 17.07.2015, 03.08.2015, 06.08.2015, 10.08.2015, 2809.2015, 08.01.2016 and 11.02.2016 which were not accepted by the Respondent Bank. The said Letters dated 28.09.2015, 08.01.2016 and 11.02.2016 have been sent to the Respondent Bank after issuance of demand notice dated 10.08.2015. The said Letter dated 28.09.2015 is for regularization of loan account and the request has been made to grant permission to the applicants to operate the account and it is admitted therein that respondent bank has initiated SARFAESI Action. The Applicants vide Letter dated 05.10.2015 intimated the Respondent Bank that the regularization had not been taken so far by the Respondent Bank and it has been requested that they may be permitted to operate the loan account All the letters of the Applicants sent to the Respondent Bank are regarding regularization of the account and it appears that enough time has been consumed in correspondence between the parties for the regularization of the account but ultimately of no avail. The Applicants went on communicating with the Respondent Bank till

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08.01.2016 and during this period the Applicants have not filed any Application under Section 17 of the SARFAESI Act taking all the grounds as have been taken in the present SA. It appears that Respondent Bank did not show any inclination at any point of time to consider the request of the applicants for the regularization of the account. The Respondent Bank has initiated the action under Section 13(4) of the SARFAESI Act and it has already taken the Symbolic Possession of the suit flats but the same has not been challenged by the Applicants and instead of raising their grievances, they indulged into correspondence with the Respondent Bank but all efforts went in vain. There is alarming and inordinate delay on the part of the Applicants in raising their grievances in respect of breach of provisions under Section 13(3) of the SARFAESI Act This course of action on the part of the Applicants clearly shows that they had acquiesced to actions of the Respondent Bank based on impugned Demand Notice and they kept on making attempts to get the account regularized. The Applicants have raised their grievances only by filing S.A. on 21.08.2018. Although, the Applicants have raised the legal issue but on account of delay and latches on their part in

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raising their grievances in respect of breach of provisions under Section 13(3) of the SARFAESI Act, the Applicants have entitled themselves to get any relief from this Tribunal in exercise of Jurisdiction under Section 17 of the SARFAESI Act.

¶218

Para 12. Further, I find that it is for the parties concerned to come to a meeting point in accordance with policies and guidelines of the RBI for which Applicants, if so advised, may approach the Respondent Bank for the OTS and the Respondent Bank is at liberty to consider the same strictly in terms of guidelines of the RBI This observation is simply a suggestive and without prejudice to the rights of the Respondent Bank.

¶219

The Order dated 27.08.2018 is already submitted in a separate Compilation of Judgments.

¶220

(75) It is respectfully submit that the Order was not challenged by the Applicant. Therefore the issues raised in the Application comes to an logical end. Regarding limitation issue and maintainability of the SARFAESI Application, this Hon’ble Court have taken a view in an identical matter in S.A. No. 78 of 2020, in the matter of “Sahaj Ankur Developers v/s. Indiabulls Housing Finance Ltd.; by its Order dated 26.10.2020, that if the party fails to challenge Symbolic Possession, the S.A. is

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not maintainable. In the above Judgment Para No. 164 says as under:

¶223

“Upon expiry of 60 days of the Notice period, the Defendant No. 1 took symbolic possession on 1^st April 2019, The Applicants admit the symbolic possession in the Writ Petition (paragraph no. 2.4). The Applicants did not file any Securitisation Application to challenge the Symbolic Possession taken by the Defendant No. 1. Therefore, an adverse inference has to be drawn that the Applicants found no illegality or infirmity in the measure taken by the Defendant No. 1. Understood thus, the Symbolic Possession taken by the Defendant No. 2 attained finality upon expiry of 45 days from 1^st April 2019.

¶224

It is respectfully submit that the above observation and the Order is squarely applicable to the present case, more particularly state herein below.

¶225

The copy of the Judgment is already submitted in the Compilation of Judgments.

¶226

(76) It is further submit that instead of filing Appeal before Hon’ble DRAT, probably to avoid to deposit 50% total claim; the Applicant have filed a Review Application No. 5 of 2018. In the Review Application, the Applicant raised almost identical allegations. After hearing the parties, and after considering all facts and legal provisions, the

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Hon’ble Court dismissed the Review Application by its Order dated 29.11.2018. It is a detailed Order and the Hon’ble Court dealt with all the issues raised by the Applicant.

¶229

The copy of the Order is already submitted in the Compilation of Judgments.

¶230

(77) Thereafter Applicant have filed a Writ Petition (St.) No. 27 of 2019 before the Hon’ble High Court challenging Order dated 27.08.2018 and Order dated 29.11.2018. The Applicants have once again argued all issues raised in the S.A. and Review Application before the Hon’ble High Court. After hearing both the parties the Hon’ble High Court dismissed the Writ Petition by its Order dated 08.01.2019. The Hon’ble Court before dismissed the Petition advised the Applicants to pay the outstanding dues, otherwise to file appropriate Appeal before Hon’ble DRAT.

¶231

The copy of the Order is already submitted in the Compilation of Judgments.

¶232

(78) It is further pertinent to note that even though the Hon’ble High Court directed the Applicant to pay the dues or to file before the Hon’ble DRAT; however the Applicant have not filed any Appeal. On the contrary, the Applicants have again filed a separate S.A. before the Hon’ble Court to challenge the further actions initiated by the Respondent Bank, and have also filed separate

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Interim Application to challenge the action initiated by the Bank. In one of the Interim Application was allowed by this Hon’ble Court. The Respondent have challenged the same before the Hon’ble DRAT being Misc. Appeal No. 83 of 2019. The Applicant have vehemently argued and have raised all issues, which were raised in the S.A., before the Hon’ble DRAT. After hearing the parties the Hon’ble DRAT partly set aside the interim Order and have allowed the Respondent Bank to sell one of the Property. The Hon’ble DRAT granted liberty to the Applicant to challenge the Sale if there is any irregularity in the proposed Sale. It is pertinent to note that the Hon’ble DRAT not considered any other issues raised and argued by the Applicant.

¶235

The copy of the Hon’ble DRAT Order is submitted alongwith the Compilation of Judgments at Serial No.2.

¶236

(79) It is further submit that pending the above S.A.’s and the above DRAT Appeal, the Applicant approached the Respondent Bank for settlement and have also submitted several proposals. Even the Applicant submitted before the Hon’ble Rajasthan High Court; and even before the Hon’ble DRAT their intention to settle the matter with the Respondent Bank. The Applicants have submitted the OTS proposals for settlement,

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which were not considered and rejected by the Respondent Bank, since all the proposals were not as per Banking norms and RBI guidelines.

¶239

(80) It is further pertinent to note that pending the above S.A. the Applicants have approached the Bank for settlement and have submitted several OTS proposals. The Respondent Bank not considered the same since the OTS proposals were too low. The copies of the OTS proposals and the correspondences were submitting alongwith compilation of documents. It is pertinent to note that in the above OTS proposals, the Applicants have not disputed the liability and/or raised the alleged irregularities raised in the Application. Therefore the Applicants have accepted the liabilities stated in the 13(2) Notice, and not having any other grievances.

¶240

(81) It is also pertinent to note that pending the above S.A. the Applicant Bank have sold the following mortgaged properties viz. (1) Flat No. 16, Ganpathi Enclave, Block B, 5^th Floor, Madrampura Ajmer Road, Jaipur, Rajasthan; and (2) Flat No. 13, Ganpathi Enclave, Block B, 5^th Floor, Madrampura Ajmer Road, Jaipur, Rajasthan. The Applicants have not challenged the Sale. On the contrary the Applicant has requested the Respondent Bank to adjust the Sale proceeds of the above properties towards the

¶241

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outstanding dues. It is therefore respectfully submit that the above correspondences shows that even though the S.A. is filed the Applicants are not having any grievances against the Respondent Bank, in the SARFAESI Action initiated by them. On this ground also the S.A.’s are to be dismissed with cost.

¶243

(82) The Applicants grievance about the Registration of charge with CERSAI. It is respectfully submit that Sec. 26-D and 26-E are incorporated in the Act only to ascertain the priority over the property for the secured creditors (Financial Institutions) with other claimants, including Government dues. The above issue was discussed and decided by the Full Court Judgment Hon’ble Bombay High Court dated 30.08.2022. (See Para 76 to 79 and 182 of the Full Court Judgment) The copy of the Judgment is annexed alongwith the Compilation of Judgments. In the present matter there is no dispute regarding “priority” over the mortgaged properties. The Mortgage is admitted by the Applicants. As stated hereinabove the Applicants by its undertaking and Power of Attorney allowed the Respondent Bank to sell the properties in order to recover the Banks dues. It is therefore submit that the Registration of CERSAI is not an issue before this Hon’ble Court.

¶244

(83) It is further submit that admittedly the Applicant

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have not challenged 13(2) and 13(4) after the Symbolic Possession. Therefore they have waived their right to challenge the Notice u/s. 13(2) and 13(4) of the Act. This issue was decided by the Hon’ble Supreme Court in the matter Sri Siddeshwara Cooperative Bank Limited and Another V/s. Ikbal And Others, in Civil Appeal Nos. 6989-90 of 2013 decided on 22.08.2013 before Hon’ble Supreme Court of India.

¶247

(84) It is pertinent to note that the partner Shri. Nitin Goenka was not retired from the firm; but there are several litigations were pending before Hon’ble Rajasthan High Court, Company Law Board etc. It is further say that the Respondent have considered all partners credibility and financial status while considering credit facilities to the Applicant No. 1, Partnership Firm. It is further say that the Credit Facilities being the Bill Discounting Facilities, it affects the running of the account. Therefore, the Respondent have stopped the operation of the Account.

¶248

(85) It is further submit that in the Partnership Deed, there is no specific clause for availing Credit Facilities from Financial Institutions. In clause No. 12 of the Partnership Deed is stated as under.

¶249

“That with respect to any matter not specifically provided for hereinabove the partners may act or arrange for as may be mutually agreed by and

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between them from time to time”.

¶252

(86) It is respectfully submit that since there is no specific clause for availing the credit facilities, in the Partnership Deed the clause – 12 is applicable for the present case. The clause says, if any matter not specifically mentioned in the Deed, all partners consent is required to avail the Credit Facilities.

¶253

(87) It is therefore respectfully submit that one of the partner is not agreeing to operate the account, we have acted upon the terms of Partnership Deed, and have stopped the operation of the account. The copy of the Partnership Deed is submitted alongwith the Compilation of Documents at Serial No.3.

¶254

(88) It is further submitted that the prayers in the S.A.’s are not maintainable. The issue of appointment of Advocate commissioner was decided by Hon’ble Supreme Court. The Applicant not challenged the section 13(2), 13(4) of SARFAESI Act, 2002 at the time of taking the Symbolic Possession of properties. Therefore strictly speaking the Applicant have waived their right to challenge the actions and/or whatever may be issues raised in the Notice issued u/s. 13(2) and u/s. 13(4) of the SARFAESI Act, 2002. Now they cannot challenge the same. Therefore these prayers are not maintainable. It is therefore

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submit that the S.A. is to be dismissed on this ground itself.

¶257

(89) In the present matter, the Applicants have filed several proceedings, on the same grounds. This Hon’ble Court, Hon’ble DRT-I, DRAT, Hon’ble High Court etc. and have wasted the Hon’ble Courts valuable time. It is therefore submit that it is nothing but abuse of process of law and wasting of this Hon’ble Court time. Therefore this Hon’ble Court can also impose cost upon the Applicants.

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(90) It is respectfully submit that the above observation and findings are absolutely applicable to the present case. In that Order this Hon’ble Court, imposed cost upon Applicant and held as under:

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(in the last 10 ten lines of Para No. 204, which is reproduced hereunder:)

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“The Applicants have wasted precious time of the judiciary. The Securitisation Application filed by the applicant is frivolous and vexatious. It is, therefore, necessary to impose exemplary, punitive costs in the sum of Rs.4 Lakhs (Rs.1 Lakh to each Defendant) so that a message is passed to the other litigants, not to indulge in frivolous and vexatious litigation and waste the precious judicial time of this Tribunal”

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(91) It is respectfully submit that the above observation made in the Order passed in S.A.

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No.78 of 2020 of this Hon’ble Court Order is squarely applicable to the present case, more particularly state herein below.

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(92) In view of above facts and legal submissions, it is respectfully submit that this Applicants are not having any merit. Therefore it may be dismissed with cost.

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Findings:

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(93) The Tribunal shall now consider the issues raised by the applicants.

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(94) NPA : The applicants did not seriously challenge the NPA classification by the lender. They have not asked for any relief concerning the NPA declaration by the secured creditor. It means the applicants are not aggrieved by the account’s classification as NPA on 31^st March 2015.

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(95) 13(2) notice : The applicants have challenged the statutory demand notice on the ground that the authorised officer failed (i) to disclose his name and designation, (ii) to give the break-up of the principal and interest outstanding and thus, breached Section 13(3), and (iii) to give the meaningful reply to the applicants’ objection-cumrepresentation to the demand notice, which breaches Section 13(3A).

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(96) The secured creditor’s counsel attempted to demonstrate that the 13(2) notice contains all requirements. The authorised officer has not

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suppressed or omitted any information. The Tribunal analyzed the statutory demand notice and found that the secured creditor’s statement and evidence are at complete variance.

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(97) To further test the applicants' allegations, the Tribunal perused the averments in the S.A., the bank’s reply affidavit and evaluated the evidence adduced by the parties.

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(98) The demand notice dated 10^th August 2021 is annexed to the applicants’ compilation on pages 50 to 54. The authorised officer issued it to the borrowers, guarantors and mortgagors. A perusal of page 52 reveals that the UCO Bank’s authorised officer signed it by endorsing the rubber stamp. Indeed, the authorised officer did not disclose his name and designation.

¶274

(99) To defend the statutory notice, the bank in its reply affidavit in paragraphs 8 to 10 states that (i) it gave a proper reply to the applicants' objection and (ii) G.S. Sharma, then Asstt. The General Manager of the Nariman Point Branch, signed the statutory notice. Save and except the name and designation, the defendant bank adduced no evidence in support of its case. Keeping in mind the defendant bank’s response, the applicants relied upon paragraph 15 (reproduced below) of the Hon’ble DRAT’s judgment in IDFC First Bank Ltd. versus Tristar Cars Pvt. Ltd.,

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MANU/DM/0018/2019 .

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“15. Now, it may be relevant to examine notice issued under Section 13(2) of the SARFAESI Act to appreciate the contentions and rival contentions of both parties so as to understand whether it is in compliance of the above referred section and rules. This notice is dated 17.7.2017 consisting of four pages and on the last page one person signed above the designation Authorised Officer. It is not known whether there is any post in this Bank with designation of Authorised Officer. When the rule contemplates that officer must not be below the rank of Chief Manager or a person authorised by Board of Directors of Trustees, the person signing such notice shall possess such designation. Form a bare look at the notice, (scanned copy of which is reproduced above) one cannot satisfy that it is in compliance of the above referred provision and the Rules. The Bank has not produced any material, either before the Tribunal below or before me, to show that the person who signed the notice is authorised to do so in accordance with provisions of the SARFAESI Act. It is not even referred to the name of the officer who is designated. Therefore, the Tribunal below rightly declared it as a defective notice and I do not find any wrong in the order of the Tribunal below. ”

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(100) It is difficult for the Tribunal to ascertain whether the signatory to the demand notice is authorised by the decision-making authority. The statutory demand notice fails to test the ruling in Tristar Cars (supra). An authorised officer would mean a person having a valid and subsisting delegated authority approved by the competent authority to discharge duties under the SARFAESI Act and the Rules. Rule 2(a) defines an authorised officer as a person or class of persons designated as such to enforce the provisions of the SARFAESI Act. There is no explanation for the act or omission of the officer’s name and designation. Non-disclosure of the name and designation can be for various reasons within the knowledge of the secured creditor or its authorised officer. Mere disclosure of the name and designation three years after the issuance of the statutory notice without any iota of the authorisation is insufficient and will not validate it. It remained and continues to remain in the category of an invalid notice. The authorised officer had abundant time to rectify the apparent lacuna. Such rectification is permissible at the initial stage but is impermissible or loses the legal right to do so upon initiation of 13(4) measures on the face of it. The framers of the Rules knew that to err is human. It, therefore, clothed the authorised officer to invoke Rule (3A) by issuing a

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revised demand notice by changing or modifying the 13(2) notice and serving the revised notice upon the borrowers.

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(101) Actual notice is when it provides positive and relevant information about a fact. The statutory notice is a prescribed notice under the SARFAESI Act which requires the noticee to know that as per Rule 2(a) the authorised officer is not below the rank of the Chief Manager of the public sector bank or has been expressly authorised to exercise powers of superintendence, direction and control of the business or affairs of the secured creditor. It fails the test of sufficiency and adequacy of reasonable notice. The authorised officer has presumed that the borrowers are conversant or not ignorant of the name and designation. In the Tribunal’s view failure to mention the name and designation would make the statutory notice vague or ambiguous. It is a material defect enough to affect the cause of action and cannot be condoned by any stretch of leniency and thus, necessarily invalidates the notice.

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(102) The secured creditor’s counsel attempted to convince the Tribunal that the applicant did not challenge the 13(2) within forty-five days from the measure of taking the symbolic possession. The Tribunal disagree with the case set up by the secured creditor which is against the law laid

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down in Mardia Chemical’s case. Mr Das would rely upon the ruling in (i) Arce Polymers Pvt. Ltd. versus Alpine Pharmaceuticals Pvt. Ltd. and others, (2022) 2 SCC 221 , (ii) the judgment of this Tribunal in Sahaj Ankur’s case for the proposition of waiver or abandonment or relinquishment of the legal rights. The judgments cannot be read like a statute. Any attempt to match the colours of one case with another would lead to a disastrous outcome. The secured creditor’s counsel did not choose to respond to the judgment in S.A. No.38 of 2019 (Premnarayan Kabra versus Punjab National Bank) by which the coordinate bench at Pune, I/c of DRT-1 Mumbai quashed and set aside the 13(2) notice even though the authorised officer announced the failure of e-auction. The Hon’ble Bombay High Court did not interfere with the order and the secured creditor, therefore, respected the judgment and restored the possession. The secured creditor failed to respond to the important ruling concerning their obligation to establish and prove the action and measures as valid, binding and subsisting vide (i) M/s. Kanika Swami Versus State of U.P. and Ors., 2017 SCC OnLine All 2299 ; and (ii) Bhavdipbhai Arunbhai Dave versus Kotak Mahindra Bank Limited, AIR 2022 Gujarat 53 . The secured creditor did not even attempt to disprove the very merits of the

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point in issue.

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(103) The secured creditor heavily relied upon interim orders passed by the Tribunal, Hon’ble DRAT and Hon’ble Bombay High Court to demonstrate that rejection of Interlocutory Application declining to protect the borrowers is sufficient to non-suit them. Therefore, the principles of res judicata shall apply. It is not the secured creditor’s case that the Securitisation Applications are disposed of. Rather the secured creditor relies upon the interim orders and the higher forum’s order to put quietus to the main Securitisation Application. The Tribunal disagree with the secured creditor’s statement or submission. The secured creditor cold not satisfy the Tribunal how the principles of res judicata would apply when the main Securitisation Application is pending. Be that as it may, the Tribunal recorded in the interim order that the observations are suggestive.

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(104) The secured creditor’s case also does not convince the Tribunal as it cannot pass final relief at the interim stage as held by the Hon’ble Supreme Court in Vishnu Babu Tambe Versus Apurva Vishnu Tambe, (2017) 2 SCC 454 . The secured creditor misdirected in setting up the case of finality of the dispute by relying on the interim order contrary to the settled law. Rather, when the judgment is pronounced, the earlier interim

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order merges in the final decision.

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(105) The applicants have relied upon various judicial precedents in paragraph 16(g) of the written submissions. The proposition laid down in the judgments cannot be disputed.

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(106) Understood thus, the existence of a fact has to be appreciated regarding its relevancy. Upon careful analysis of the 13(2) notice in the facts and circumstances of the present case, the Tribunal is of the view that it would lose its sufficiency or weight of its evidentiary value. Thus, the Tribunal declares the demand notice dated 10^th August 2015 as void, and incapable of enforcement under the SARFAESI Act.

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(107) Breach of section 13(3) : The applicants also object to the 13(2) notice being violative of Section 13(3) as the defendant failed to give a break-up of the principal and the interest amount. On page 51, the demand notice shows the composite amount of Rs.17,51,32,020/- which is inclusive of interest as of 31^st March 2014 and claims future interest at the contractual rate from 1^st April 2014. The defendant produced the sanction letter dated 29^th November 2012 (pages 10 to 18). It reveals two facilities (i) working capital fund-based (EPC/PCFC) for Rs.8.5 crores and (ii) working capital fund-based (FPB/PSC/EBRD) for Rs.8.5 crores aggregating to Rs.17 crores. The renewed

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facility was granted on the condition to charge interest on both facilities as applicable and notified from time to time. On 18^th September 2015, the applicants objected to the consolidated claim of Rs.17.51 crores and called upon the defendant to give details of normal interest, penal interest and other charges debited by the bank. On 24^th September 2015, the defendant’s Assistant General Manager and Senior Manager jointly signed and responded to the applicants’ objection-cum-representation without specifically responding to the absence of details of interest, penal interest and other charges. The sanction letter shows that the borrower shall pay applicable interest as notified from time to time. Despite the production of the sanction letter (pages 10 to 18), the secured creditor or its authorised officer failed to set up the case or establish the rate of interest. The secured creditor adduces no evidence notifying the rate of interest. The authorised officer failed to record the last notified applicable rate of interest in the statutory demand notice. Be that as it may, the secured creditor did not choose to reply to the breach of Section 13(3) in its reply affidavit. In paragraph no.9 of the written submissions, the applicants have relied upon (i) PNB V. Mithilanchal IndustriesMANU/ MANU/GJ/1069/2020 , (ii)

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Madhu Sudhan Ghosh V. Bank of Baroda 2010 SCC Online Cal 2607 , (iii) Bhavdipbhai Arunbhai Dave vs. Kotak Mahindra Bank Limited (20.01.2022 - GUJHC): MANU/GJ/0273/2022 ; and (iv) Kenwood Marketing INC V. HDFC (DRAT, Mumbai order dated 20/06/2022 in Appeal No. 106 of 2016 to quash and set aside the demand notice on the ground of breach of Section 13(3). Mr Gogad demonstrated his ability to understand the ruling and has responsibly relied upon it. The four judicial precedents bind the Tribunal.

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(108) As per the judicial precedent in Mithilanchal Industries (supra), the secured creditor is dutybound to discharge its burden to prove the facts that the aggregate amount shown in the 13(2) notice only shows the principal amount and nothing more. By the statutory notice, the authorised officer laid a claim of Rs.17.51 crores which is inclusive of interest. In the Tribunal’s considered view, the secured creditor or its authorised officer failed to establish the fact. Or in other words, the secured creditor neither proved nor disproved the fact. The secured creditor failed to defend its action of issuing 13(2) concerning the breach of Section 13(3). Be that as it may, in paragraph 4 of the order dated 27^th August 2018, the predecessor-in-officer observed that (i) the demand notice does not reflect the

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details of the principal, interest, etc. it only made an aggregate claim of Rs.17.51 crores inclusive of interest, and (ii) the applicant asked for the details of principal, interest, penal interest and other charges debited by the bank. The law laid down in (i) Madhu Sudan Ghosh and another Versus Bank of Baroda, (ii) Trupati Storage and Allied Pvt. Ltd. Versus The United Commercial Bank and (iii) Mardia Chemicals Ltd. Versus the Union of India is discussed and considered in the interim order. In the Tribunal’s considered view findings at the interim stage also favours the applicants and not the secured creditor.

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(109) Therefore, the demand notice is required to be quashed and set aside on the ground of breach of Section 13(3). The ruling in the four precedents supports the applicants' case. Hence, the demand notice dated 10^th August 2015 stands quashed and set aside.

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(110) Breach of section 13(3A) : The applicants also seek the Tribunal to rule on the breach of Section 13(3A) as the defendant failed to give a meaningful reply to the applicants’ objection-cumrepresentation. The authorised officer failed to consider the issue that goes to the case’s root. On 24^th September 2015, the secured creditor’s two officers i.e. senior manager and Assistant General Manager jointly replied to the applicants’

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objection-cum-representation. The senior manager is incompetent under the SARFAESI Act whereas, the Assistant General Manager failed to disclose his identity and designation. The result echoes that of the 13(2) notices issued without name and designation. In paragraph 8 (last sentence) the defendant states that a proper reply was given. The Tribunal thoroughly looked into (i) the demand notice, (ii) objection-cum-representation to the 13(2) and (iii) the bank’s reply notice of the applicants’ objection. The reading of paragraphs (a) to (e) of the bank’s reply to the 13(2) objection shows that the secured lender has not responded to the applicants’ specific issue of providing details of the rate of interest notified and charged from time to time. The Tribunal is of the considered view that the secured creditor or its officer failed to apply mind or show fairness or reasonableness while replying to the applicants’ objection. The Tribunal doubts whether the officer took the assistance of the internal mechanism available to him to respond to the applicants’ objection. The rejection of the applicants’ objection is biased, arbitrary and not meaningful. The officer’s response to rejecting the applicants’ objection is drastic.

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(111) Section 14 order : The applicants challenge the Section 14 application filed by one Bheemanna

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based on the power of attorney granted by the employer on 12^th December 1988. Then he did not hold the post of Chief Manager or above. The Ld. Chief Metropolitan Magistrate erred in not verifying Mr Bhemanna’s competency to present the Section 14 application.

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(112) The applicants seriously allege that the defendant’s officer procured the Section 14 order by making a false statement. The applicants’ counsel states that it is undisputed that the predecessor-in-office did not protect the applicants’ interest and therefore, the defendant bank took physical possession of the secured assets on 10^th January 2019 i.e. during the S.A.’s pendency. On 27^th August 2018, the applicant’s I.A. No.1085 of 2018 was dismissed against which Review No.5 of 2018 was preferred. The review application was also dismissed on 29^th November 2018. The Writ Petition (stamp) No.27 of 2019 was also dismissed on 8^th January 2019.

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(113) Mr Das laid more emphasis on these orders to reject the S.A. stating that it has attained finality. Rather the bank through its counsel would urge that the issue concerning the legality and validity of the 13(2) notice, 13(3), 13(3A) and section 14 order was decided at the interim stage. The law laid down in Vishnu Babu Tambe Versus Apurva Vishnu Tambe, (2017) 2 SCC 454 does not permit

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the Court of the Tribunal to pass the final order at the interim stage.

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(114) In paragraph 10 of the order dated 27^th August 2018, the predecessor-in-officer observed that the bank should not make the wrong statement which is termed as a mistake. The secured creditor failed to establish how it is a mistake of fact which can be overlooked. The Tribunal has no benefit from the affidavit in the present proceedings of the officer filing section 14 application or nine-pointer affidavit to state about the mistake made in good faith. In paragraph 12 of the order dated 27^th August 2018, the predecessor-in-officer stated that the observations are suggestive.

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(115) Mr Gogad vociferously urged the Tribunal to declare the act of taking physical possession as illegal. Mr Gogad demonstrated from the ninepointer affidavit showing the authorised officer’s conduct of making a false statement that the applicants did not object to the 13(2) notice.

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(116) The Ld. CMM erred by not (i) verifying or ascertaining the truth concerning the objection to 13(2) and hurriedly passed the order, (ii) scrutinising the compliance of nine conditions to the 1^st proviso to Section 14. The officer who filed the Section 14 application produced the power of attorney of the year 1988 showing his designation as “Assistant”. It is undisputed that no authority

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as contemplated under the SARFAESI Act read with the Rules was produced by the secured creditor. In the absence of evidence proving the authority, the applicant is justified in challenging the secured creditor or its authorised officer’s competency to file the Section 14 application. Consequently, the Section 14 order passed by the Ld. CMM without demanding the authority is nonest and cannot be acted upon. In civil cases, the Appeal is treated as a continuation of the Suit before the Appellate Forum. Therefore, the Appellate Forum would within the four corners of the law consider adducing the additional evidence in appeal. The production of an authority document under Section 17(1) will not validate the Section 14 application as the Tribunal is incompetent to do so. The scope of inquiry under Section 17 is very limited. The Tribunal cannot assume jurisdiction under Section 14 and comment upon the subsequent production of the officer’s authority in an application under Section 17(1). The case under Section 14 which stood terminated upon passing of the order by the Ld. CMM cannot be reopened by the Tribunal.

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(117) The officer also made a false or untrue statement before the Ld. CMM that the borrowers did not object to the statutory demand notice. The Ld. CMM erred in not verifying or scrutinising the

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officer’s statement and accepted it as gospel truth. The Tribunal agrees with Mr Gogad after reading paragraph 10 of the Section 14 application. The secured creditor or its officer suppressed the fact that the borrowers objected to the demand notice on 18^th September 2015. The applicants’ reliance on the judicial precedent on fraud in S.P. Chengalvaraya Naidu (dead) by LRs Versus Jagannath (dead) by LRs, (1994) 1 SCC 1 is fully justified. Mr Das did not respond to the law laid down in Satishkumar Surendra Shetty versus the District Collector and others, 2022 SCC Online Bom 2847, that the section 14 application is exparte in nature and therefore, the secured creditor is put on a higher onus to ensure strict compliance with contents and truth. With even the slightest hint of untruthfulness, the section 14 application then becomes susceptible to challenge.

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(118) Section 23 and 26D : On 24^th January 2020, Chapter IV of the SARFAESI Act was notified. Undisputedly, the secured creditor issued a sale notice on 13^th September 2022 and got the CERSAI registration on 15^th October 2022 i.e. five days before the e-auction. The secured creditor was duty-bound to follow the mandate in section 26D. Undisputedly, the secured creditor annexed on page 109 affidavit (exhibit 19) the Registration

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of Security Interest Acknowledgement Report which shows the security interest was created on 15^th October 2022. The measure of issuing a sale notice on 13^th September 2022 and all earlier auctions without registering the security interest with the Central Registry are beyond the secured creditor or its officer’s jurisdiction. The secured creditor got the security interest registered during the pendency of the S.A. i.e. on 15^th October 2022. Understood thus, the secured creditor took steps under Chapter IV of the SARFAESI Act during the S.A.’s pendency. However, the authorised officer initiated the action and measures before its registration. Section 26D of the SARFAESI Act puts an embargo upon the secured creditor not to exercise the security interest enforcement before registration with Central Registry. The secured creditor thus stands qualified from 15^th October 2022 to initiate action and measures under the SARFAESI Act read with the Rules.

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(119) Limitation : According to the bank the measure of challenging symbolic possession is time-barred and therefore, the applications are not maintainable. The secured creditor relies upon the judgement pronounced by this Tribunal in Sahaj Ankur Developers versus Indiabulls Housing Finance Ltd. in S.A. No.78 of 2020. In the case of

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Sahajankur, the borrower (i) did not keep the lis alive, (ii) did not apply for a certified copy of the section 14 order, (iii) failed to establish the source of possessing the section 14 order, (iv) failed to apply to condone the delay in filing the S.A., (v) did not respond to the 13(2) notice. The facts and circumstances in Sahajankur’s case are completely different from the present and therefore, the observations made therein would not apply.

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(120) The applicants demonstrated that S.A.No.473 of 2018 is filed challenging the section 14 order and the act of the advocate commissioner’s taking physical possession of the Mumbai properties on 28^th August 2018. On 21^st August 2018, the applicants applied under section 17(1).

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(121) The applicants then demonstrated that TS.A. No.308 of 2022 (S.A. No.36 of 2019, DRT-1) was filed challenging the measure of taking physical possession on 10^th January 2019 and e-auction scheduled on 31^st January 2019. The applicants presented the S.A. on 27^th February 2019.

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(122) In the Tribunal's considered view, both the SA are filed within forty-five days and therefore, the secured creditor’s objection concerning limitation and maintainability is not tenable.

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(123) Dispute between the partners : The Tribunal has no jurisdiction to dwell on the issue. The secured

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creditor has attempted to take shelter from the disputes between the applicants and one Nitin Goenka. The reference to the partners' dispute finds a place in paragraphs 15 to 19 reply affidavit (exhibit 12). Paragraph 19 of the reply affidavit would mean the secured creditor acted upon one of the partners (probably Nitin Goenka) who disagreed to allow the operation of the bank account. It appears the secured creditor has favoured Nitin Goenka by relying on clause 12 of the partnership deed. The defendant conveniently ignored clause 11 of the partnership deed that any partner can operate the bank account. Be that as it may, the secured creditor adduced no evidence of objection to the operation of the bank account or any court’s order or arbitration award in this regard.

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(124) Regularisation : Undisputedly, the applicants requested the defendant to regularize their account vide various letters referred to in paragraph 7 of the order dated 27^th August 2018. But it appears that the defendant did not agree to do so.

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(125) OTS Proposal: The applicants attempted to settle with the secured creditor by giving an OTS proposal. The lender rejected the applicants’ OTS proposal as it was not as per the RBI guidelines or the defendant’s banking policy. Mr Das relied

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upon the judgment in Deepika Paresh Thakkar versus Gruh Finance Ltd. and others, for the proposition that once a party gives consent to make a certain amount, the question of then going into the merits of the case does not arise. The lender rejected the OTS application may be for the reason that OTS is not a matter of right. All these go to show the applicants' readiness and willingness to explore the settlement possibility as they cannot avoid the liability which increases with the passage of every day.

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(126) Lastly, the present case shows how the bank or its officer allowed to defeat the aim and object of speedy recovery by the beneficial piece of legislation to their detriment. Even after more than 2700 days from the date of issuance of 13(2) the secured lender’s officer fails or neglects or ignores to take a conscious decision concerning the legality and validity of the action and measures under the SARFAESI Act read with the Rules. The officer’s approach is thoroughly impracticable and responsible for overburdening the judicial system with such unsensible litigation. The officer’s accountability needs to be examined in the present case. Whether the officer acted negligently or in good faith also needs thorough scrutiny by the secured creditor’s higher authority.

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(127) After examining the facts and circumstances of the case and evidence produced by the parties, the Tribunal concludes that the action and measures taken by the secured creditor or its officer are not as per the SARFAESI Act read with the Rules.

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(128) The Tribunal declares that the 13(2) notice dated 10^th August 2015 is wrong in law and is hereby quashed and set aside. The measures initiated under sub-section (4) of Section 13 based on the 13(2) notice are also quashed and set aside. Consequently, the Section 14 order is incapable of execution or enforcement. The defendant is ordered and directed to restore the possession of the mortgaged properties to the applicants within eight weeks from the receipt of the order.

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